What is blockchain

If you have a mental block when it comes to understanding what does Blockchain mean-well you’re not alone. However, there are plenty of reasons why you should be well versed in this particular aspect of our Metalok for its ability to save you from all fraud, forgery and data leakage.

But first what exactly is blockchain and why is it helpful for every industry from Bollywood to Banking?

Blockchain is a solution where every single piece of information is not just stored in one single server but on multiple servers. Mohit Goel CEO and Co-founder of Metalok explains it in a simple way. “Just like we don’t store all our money or valuables in one cupboard or one place, the Blockchain principle is that whether it is your data records or your money or your IP it is not just saved on one server but multiple servers”. The easiest way to understand blockchain is to imagine a ledger. Now imagine that this ledger is duplicated and is saved on every computer that is part of the network on the blockchain. Whenever someone makes an entry to the ledger, that entry is added to each and every copy of the ledger on the network. So, a blockchain is essentially a shared database. Each block can be imagined as a line of data in that shared record book or that shared ledger. However, before a line can be added to the ledger book, the transaction has to be confirmed by every user on the network who has the ledger’s copy on their terminal.

This is why the blockchain is often described as decentralised. The multiple computers make sure every detail of the transaction is authorised and legitimate before agreeing or disagreeing to add the line item. Once the record or a block is added it cannot be changed.

The verification process is why blockchain’s history cannot be edited. If anyone attempts to modify a record, it will be rejected since the entire network has proof that the entry is invalid.

The verification process can be compared to paying someone in public. Imagine you are giving money to someone with hundreds of people watching you hand over the money. Everyone has watched you hand over the money and if they need to be asked then they can agree that the money was handed over. They could also confirm the amount paid, location, and time. If someone in future tries to deny or refute the details of this transaction, he cannot, because there are too many witnesses to the transaction when it took place.

The blockchain is therefore essentially a shared transaction log with a history that cannot be edited and therefore has built-in security.

Hence it’s a great way of allowing people, even people who may not have a trust factor between them, to share data in a secure way.

So now that we have a basic idea of what a blockchain is, what forms the blocks in the blockchain? Let’s understand that.

Why did the need for Blockchain arise?

Blocks are what store data on the blockchain and it is up to whoever is making the blockchain to determine what kind of data they want to store in that block.

As each block is completed, it joins the other blocks on the chain creating a permanent record of every transaction that is available to all the users of the blockchain in real time.

This combination of features creates a high degree of security and makes the blockchain very difficult to change.

There are many pieces of information included within a block, but it doesn’t occupy a large amount of storage space. Blocks generally include these elements:

Magic number: A number containing specific values that is an identifier of the blockchain network.
Blocksize: Sets the size limit on the block so that only a specific amount of information about transactions can be written in it.
Block header: Is an identification of a particular block on the blockchain.
Transaction hash: It’s a string of characters given to every verified transaction that gets added to the blockchain.
Transactions: A list of all of the transactions within a block.

Blockchain was first developed to allow Bitcoin and other cryptocurrencies to operate without the need for a central authority. This not only reduces risk but also eliminates many of the processing and transaction fees. Blockchain was the vision of developers who believed that the current banking system had flaws. Mohit Goel CEO and Co-Founder of Metalok says,

Suppose we are talking about a big transaction from India to Australia. We need to go through a lot of clearances which can be a process of 1,3 or even 7 days. Imagine a business who is working from their cash flow, who would want to wait 3 to 7 days for the payment to be cleared by the banks. To solve such problems the tech of Blockchain was built.”